Feeling a Little Insecure? JP Morgan Issues a Report Critical of Bitcoin

Now this is special. John Normand, JP Morgan’s head of global FX strategy has just issued a report on Bitcoin to educate his “sophisticated” clientele on why they must avoid the revolutionary payment protocol and currency Bitcoin. Coindesk has done some excellent reporting on the matter. They write:

Released on 11th February, a new report by US-based multinational financial services company JPMorgan issued a sharp critique of bitcoin and other digital currencies.

The eight-page report, authored by the company’s head of global FX strategy, John Normand, aimed to present the “risks and opportunities” posed by bitcoin.

Normand writes:

“As a medium of exchange, unit of account and store of value, it is vastly inferior to fiat currencies.

Since governments are quite unlikely to accord it the status of legal tender, bitcoin or other virtual currencies would not reach the scale and scope to render them worthwhile for widespread commerce, payments or investment.”

Normand explains:

“Recall that currencies don’t become widely used spontaneously or through a grassroots campaign. They become widely used nationally because a government declares them legal tender, and they become widely used internationally because they are legal tender in a significant economic area with large, unrestricted capital markets.”

Yes slaves, don’t try anything new. Sure, Bitcoin has gone from nothing to a $8 billion valuation in five years, nothing to see here. Obey. Your government loves you. Only politicians and Central Banksters are sophisticated enough to create money and handle it. Don’t get any big ideas. Think small, that’s where we want you serfs.

Normand used bitcoin’s price fluctuations, which he described as “brutal,” as an example to prove his assertion. He cited the statistic that bitcoin’s volatility has averaged 120% over the last three years, while a typical G10 currency will range from 7% to 16%.

Right, because making 55x my money in 2013 was such a “brutal” experience. I should just keep my money in Federal Reserve Notes, aka slave coupons, and watch my purchasing power vanish. Such stupidity could only be written by an investment banker.

Normand opened this section of the report by noting that saving 1% on transaction fees would be an attractive prospect for merchants. However, he stated that such savings would not outweigh the risk of the currencies volatility.

Normand did not mention that major processors such as BitPay and Coinbase limit merchants from this potentially harmful exposure, as he suggested bitcoin would complicate a company’s cash and risk management.

Of course he didn’t mention it, it doesn’t fit into his story.

With JP Morgan bashing Bitcoin and Apple banning Bitcoin wallets from their app store, it is becoming increasingly clear that BTC is a globalist, NSA conspiracy to enslave you in one-world government.

That’s called sarcasm.

Full article here.

In Liberty,
Michael Krieger

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18 thoughts on “Feeling a Little Insecure? JP Morgan Issues a Report Critical of Bitcoin”

  1. No offense but the following was a poor rebuttal to the point of using something as volatile as BTC for a large scale medium of exchange: “Right, because making 55x my money in 2013 was such a “brutal” experience.”

    So how did your recent recommendations work out for stability? No stakes here. Just sayin’ your remark misses the point. And, no, I’m not against the idea behind Bitcoin at all.

    Reply
    • You took a tongue in cheek comment way too literally and seriously. Most retailers don’t take the currency risk as you know, and as the article explains this is how Facebook would have traded from its inception to a $8 billion cap. Early days, new currency, natural evolution.

      Best,
      Michael Krieger

  2. I still don’t think your tongue and cheek response was helpful to the point the shuck made. Yeah, I know there’s no cash/management risk to industry and discredits the author in a big way. I get that. But “brutal” volatility is true for individuals. It is massively volatile–therefore not a good replacement for fiat which is what the overall point was.

    The natural volatility of it is exactly why it’s not a good replacement to fiat in the big picture–but a great tool it still is nevertheless (not discounting that).

    But how much fiat would you really hold in it? Which still leaves most money in the corruption of fiat for a medium of exchange. The hammering of PM’s is designed to create big-time volatility to try to make them seem unsafe–with BTC; it will remain naturally volatile and it is unlikely to back fiat for stability either.

    BTC certainly has its place, no doubt about it. And I have no doubt too that it’ll become far more relevant as time passes too. They have first mover advantage, and early mistakes are what will give Bitcoin’s its edge over other crypto-currencies over time. Just the way Boeing’s early mistakes turns out to be their largest moat on top of their infrastructure. Can’t be duplicated–same will be true of BTC IMO as they scale and have the most adoption.

    But the author’s point is still one to reckon with: it’s not a good replacement for fiat (which I am not defending in the least). As Ron Paul says, we should simply allow competition and let the free market decide what it likes to use.

    Reply
    • As you recognize, the volatility is a function of two things. 1) It’s very young age. 2) It’s still relatively small “market cap.”

      It’s a natural evolution. Ultimately free market, P2P, decentralized currencies will replace fiat and this is just the birthing phase of that. It’s amazing and fun to watch.

  3. As you recognize, the volatility is a function of two things. 1) It’s very young age. 2) It’s still relatively small “market cap.”

    I don’t understand how size will limit volatility or the size of it’s “market cap.” Just because it gets adopted big time doesn’t change the volatility function on its own.

    I guess these things don’t have to be “stable” to replace fiat. But I think it makes it a tougher hurdle….the masses love to herd and be herded, as you constantly allude to with remarks like, “Yes slaves, don’t try anything new.”

    Anyway, I agree these times are historical and it is indeed fun to be alive today.

    Reply
    • Volatility will go down as more money goes into it. There will be more players, more money, liquidity, and larger volumes. Hence, the volatility goes down when that happens. That’s the point. With less money and volume in it now, the price can be moved with relative ease.

      Since there are no options or derivatives associated with Bitcoin on a large scale, the price always goes back up because people/hedge funds are always waiting for the price to go down to get a position in it. Once sellers dump their positions they have no more Bitcoin to sell and up it goes again.

      This current attack on Bitcoin is giving smart buyers the opportunity to buy it on the cheap. As soon as the current propaganda smear campaign is over and they work out the withdrawal issues the price will once again be above $700-$800. My guess is within 2-3 weeks from now.

      Barney knows.

  4. “Volatility will go down as more money goes into it. There will be more players, more money, liquidity, and larger volumes. Hence, the volatility goes down when that happens.”

    Just like the 20 trillion dollar stock market? That beacon of stability in size and scope?

    Reply
  5. Well, some might–like international trading partners. It’s why the Chinese yuan is gaining acceptance and market share for bi-lateral trade. China is the only emerging market currency over the last year and longer that has risen against the US Dollar. I know your stance and the pitfalls of a gold-backed yuan, but if it happened China is going to attract more capital than Bitcoin can dream of.

    Reply
    • I disagree with you there. I think that would’ve been true years ago, but not today. The world is evolving, that would be devolution. Nor would I trust Chinese promises on gold backing. We don’t need a government to back something like gold which is inherently its own backing in itself. Things like the Ripple protocol will allow gold to be traded like BTC is currently.

  6. Well..you can certainly disagree with me but the numbers don’t because what is true today is the Yuan is gaining acceptance internationally (and in real terms and size is stunning even compared to the parabola BTC usage). The Chinese Yuan has gone from 1.8% market share for bi-lateral trade settlement to nearly 9% since 2010 because of the stability of the Yuan. Other countries are seeking refuge from dollar inflation, and they aren’t going to flock to BTC LOL.

    But I get your point and politically I agree with you–we don’t need government running our lives—we need centralization. Nevertheless, the Yuan continues and will continue to attract more capital than fathomable right now and it’ll be certainly fun to watch the tug-o-war between decentralization (what we need) to what say, the U.S. or China power elite want. China is gaining massive traction–not by others choice necessarily, but by need.

    Reply
    • Will be interesting to see how this plays out. I am strongly against a future in which we slave away like idiots under a statist currency system. We shall see, you know my stance.

  7. I can see BTC as problem, reaction, solution.

    1. CREATE A PROBLEM (opposite the objective).
    2. WAIT FOR THE REACTION
    3. OFFER THE SOLUTION
    We fall for it EVERY time.

    Problem – BTC to solve issue with fiat
    Reaction still in process
    Solution – SDR or other

    Reply
    • With PRS, the same entity (Banksters/Gov’s) needs to have done all three parts. Bitcoin is not controlled by the banksters or gov’s. Therefore, your above statement on PRS makes no sense.

      Everyone who is awake and understands finance knows the entire global financial system run by central banks is in a state of collapse. That’s actually not the problem. The collapse is the solution to the problem of the criminal central bank cartel and out of control gov’s worldwide.

      Enter Bitcoin. The people have embraced Bitcoin. The banksters and/or the gov’s are trying to suppress it at every turn. That tells you right there they are not in control of Bitcoin and are very much afraid of it. This is good news. And why everyone should, and will, embrace it as time goes by.

      Your solution of BIS SDR’s has not worked and never will. Countries are not going to use BIS SDR’s.

      The fake “solution” the banksters and gov’s will come out with down the road is their own version of a digital currency. If that gains widespread acceptance, game over. You might as well tattoo your human ID on the back of your shaved head.

      Barney knows.

    • To elaborate:

      Very few know who created BTC. What do know, highlights and in summary: NSA releases proposal for anonymous cryptographic e-cash in 96, Glass Steagall repealed in 99, Milton Friedman endorses “e-cash” in 99.

      Fast forward: Oct 2013 Balaji Srinivasan claims BTC originated in Silicon Valley, Nov 2013 US Senate practically endorses BTC, Dec 2013 revealed US Air Force building bitcoin payment gateway, Jan 2013 Eric Schmidt claimed to have said BTC “changing society” and Goldman Sachs joins board of Circle.

      Many others could highlight, China wants end to US dollar as reserve currency, CIA needs untraceable cash etc.

      Banks/Gov/Corporations/Military not afraid of BTC, that’s ridiculous.

      Better worded yet still simplified:

      Problem – How to Transition to “e-cash”
      Reaction – Introduce BTC
      Solution – E-Cash SDR or OTHER. UNKNOWN

      You should watch what Mathew Green (creator of ZeroCoin) had to say yesterday. He said, to paraphrase, thought BTC impossible to create.

      Above could use lot more explanation and thought, but better than first post.

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